§ 23. £30,151, Supplementary, Trustee Savings Bank and Friendly Societies Deficiency.
§ MR. G. C. T. BARTLEY (Islington, N.)
thought this was a very important matter, and he regretted that the Chancellor of the Exchequer was not there to explain to them this very important new departure in connection with Savings Banks. For the first time a deficiency was shown, and it was necessary, in his opinion, for the Government to have some distinct policy. (The Chancellor 1300 of the Exchequer having come in.) He hoped they should have some idea given them, of what the policy of the Government was to be. It was obvious that after giving 2½ per cent. there was absolutely no margin.
§ MR. AVALTER HAZELL (Leicester)
hoped the Government would look carefully into the matter. Some extension might be made of the limits within which savings banks funds could be invested, and everything possible done to encourage the habits of thrift of the people.
§ *THE CHANCELLOR OF THE EXCHEQUER
said the reason of the Vote was that the annual interest arising from sums invested was less than the interest paid to depositors and the expenses of management of the banks. The sums invested at the present rate at which Government securities had to be purchased, obviously produced a very low rate of interest indeed. Consols and other securities of the kind to which the investments of these banks were limited by law, stood at a very high rate last year, and consequently the profits of the banks fell in proportion. He had been asked to make a statement of policy. Last year he saw what was coming, and he had brought forward this Vote rather earlier than usual in order that the attention of the House of Commons might be directed to the matter. ["Hear!"] This was the first time it had been necessary to ask Parliament to subsidise the Post Office Savings Banks, and it clearly amounted to this—that the Government were paying depositors in those banks a higher rate of interest for their money than that money could really earn. That was earn thing which could continue. [Cheers.] He did not believe that depositors themselves would desire to receive from the State what he must call a kind of charity. He admitted that these banks were of the greatest value to the community; but it was not necessary to their value that they should pay more interest than they could earn. The public were induced to invest in Post Office Savings Banks far more by the sense of security given than by the particular rate of interest paid on their money. ["Hear, 1301 hear."] When he was asked whether he could suggest an extension of the limits at present imposed on investments by the banks, he was bound to say that he saw great difficulties in the matter. It must be remembered that the State was liable for this money, and it I would be a very dangerous thing for the State to receive this enormous sum from depositors to whom it was actually liable and then invest the money in securities of a more or less speculative nature on which great losses might be suffered. Under the present law the investments were confined to securities guaranteed by the State, and he should be most reluctant to make a change in that direction. He did not wish to say anything more at present, because he had not made up his mind as to what was to be done in a matter which was full of difficulties and was of great importance. ["Hear, hear!"] He did not wish to move in the matter one single day sooner than was necessary. So long as the present rate of interest could be maintained he wished to maintain it; but he must warn the Committee that the time was rapidly coming when it must be considered whether it might not be necessary, perhaps not in all but in some cases, to reduce the present rate of interest. ["Hear, hear!"]
§ MR. T. P. WHITTAKER (York, W.R., Spen Valley)
asked how the deficiency was arrived at. Was account taken of the redemption of Consols, which were now selling at 113 and which were liable to be redeemed at 100?
§ *THE CHANCELLOR OF THE EXCHEQUER
said that if the hon. Member would look at the Returns annually presented, he would find full particulars.
§ MR. BARTLEY
explained that really the amount of interest paid varied very fractionally for most depositors, whether the rate were ½ per cent. higher or lower. The security was the great point. It was not necessary to consider the larger deposits, up to £200. very large number of the deposits were of £5, £6, and £7, and in those cases it was obvious that the reduction of the interest by ½ per cent. would only mean to each depositor a difference of a fraction of a farthing a week. It would be a bad thing if it were to get about that a large Parliamentary Vote was necessary to balance the bank's accounts. As to enlarging the scope of investments, whatever 1302 security was permitted would be practically guaranteed by the State, its price would at once rise to the price of Consols, and the object of the Government would thereby be frustrated. There was no alternative to reducing the rate of interest. He had had long experience of a penny bank, in which the rate of interest had recently to be reduced; and no ill-effects to the popularity of the Institution resulted.
§ MR. LOUGH
hoped the Chancellor of the Exchequer would consider very carefully before he changed the rate of interest. While the Parliamentary grant was so small, it would be a pity to disturb a system which was of such value to the poor people a and there might be reason to think that the deficiency would not be permanent.
Vote agreed to.
24. £95,434, Teachers' Pension Fund, Ireland.
§ MR. J. H. YOXALL (Nottingham, W.)
asked from, what sources this money was to be drawn? Was it money due to the Irish schools, and, if so, had care been taken to ascertain whether the teachers who were entitled to these arrears were quite satisfied with the proposal to place the money in the Irish Teachers' Pension Fund? He was glad that something was being done to strengthen the Fund, but regretted that nothing had been done to redeem the promise to establish a similar fund for England and Scotland.
§ MR. FLYNN
said that the Committee ought to know exactly the position of the fund. If there was a deficiency, it was not due to any fault of the teachers, but to a miscalculation on the part of the Treasury in 1885. The fund was started out of the Irish Church Fund, and in 1885 there was a valuation, when a surplus of £196,000 was declared. This was an a important question for the teachers, as no male teacher was allowed to draw from the fund until he had given 40 years of service, and then he only received £6. year. The Irish Teachers' Pension Fund ought not to suffer because the Treasury had made a mistake.
§ MR. DALZIEL
said he wished to ask the right hon. Gentleman the Secretary to the Treasury from what sources the money necessary to place this Fund upon a sound financial basis was to come?
§ *MR. HANBURY
said that originally a large proportion of the Fund was derived from the Irish Church Fund. Owing to a miscalculation with regard to the Fund, arising out of an actuarial mistake, there was a large deficit in the amount of the Fund, and the Treasury felt themselves morally bound to do their best to make good that deficiency, and, therefore, it was that this, £95,000 was now asked for. With regard to the actual position of the Fund, he was sorry to have to state that it was insolvent to the extent of a million and a quarter. That deficiency they had to face, and they were now endeavouring to put the Fund in a solvent position. The arrangement which they now asked the House to agree to was that this sum of £95,000 should be voted in respect of a readjustment of School Grants during the last three or four years, while a certain sum would be deducted from the teachers' salaries. Pay means of an additional sum to be derived from an annual Vote of that House, the whole of the amount necessary to make up the deficiency would be obtained, and the Fund would be restored to a position of solvency. With regard to the question which had been put to him by the hon. Member for West Nottingham, as to whether the Irish Teachers had been consulted before this arrangement was adopted, all he could say was that the National Education Commissioners in Ireland were perfectly satisfied with what the Government proposed to do in the matter.
MR. GIBSON BOWLES
said that, from the statement which the Secretary to the Treasury had just made, it appeared that the Committee were asked to vote this sum of £95,000 in order to make good a deficiency which had been made by an actuary of the Treasury. In that case they must take it that the Treasury themselves were to blame in this matter.
MR. GIBSON BOWLES
said that might be so, but the principle remained the same. He thought that actuaries never made mistakes, and that they were regarded as being infallible in the accuracy of their calculations. It was clear that in this instance the Treasury actuary 1304 had not been infallible, and, therefore, the Treasury themselves were responsible. The truth was that the right hon. Gentleman the Secretary to the Treasury came down to that House and asked, not for. Supplementary Vote, but for a bill of indemnity on behalf of the Treasury. He recollected the time when the right hon. Gentleman sat on the other side of the House, and if this matter had been brought forward at that time he could scarcely say what might not have happened. The right hon. Gentleman would then probably have moved the adjournment of the House in order to call attention to it as a matter of urgency, and perhaps have followed that up by a Motion for the impeachment of the Ministry. [Laughter.] Without going to that extent, however, he thought that the Committee were entitled to have the whole matter cleared up.
§ *MR. YOXALL
said that he was not quite satisfied with the explanation which the right hon. Gentleman the Secretary to the Treasury had given the Committee in relation to this subject. He could not admit that these payments ought to come out of the arrears of the Fee Grants, neither could he admit that nothing was due to the Irish Teachers. He hoped that as the Treasury was to be generous to the Irish Teachers' Pension Fund, provided that the money did not come out of the arrears of the Irish Fee Grant, the Treasury would also be just to teachers in England and Wales and Scotland, by establishing a. Pension Fund for them.
Vote agreed to.